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Re: The Rainmaker post# 340

Saturday, 10/20/2007 11:36:45 AM

Saturday, October 20, 2007 11:36:45 AM

Post# of 1057
That does it. I won't say that it is not a legit commission, but it seems very excessive and of questionable judgment. That does at least two things:

1. It completely sabotages the stock's ability to rise. At $2.60 that is an instant double. In fact, if I were them I'd raise the $13M right now and sell the stock over the next 3 months for a 50% gain and book a $5M profit. How do you walk away from a $5M profit when you can sell for an average price of $1.95? You probably don't.

2. It further dilutes the value of existing shareholders by another 10M shares. Sure, it can produce $13M in cash for the company, but with the size of the deals they are slinging around I'm not sure they aren't shuffling around huge sums just to keep one step ahead of the next creditor in this acquisition roll-up strategy they are executing.

Clearly this management team is playing fast and loose with the share structure and they are probably doing it now that the stock is no longer sub-dollar when they can raise real cash selling stock.

But this looks like a dangerous gamble that their roll-up will generate revenues and earnings that service their growing mountain of debts. And I think that they are gambling can be seen by their looseness in announcing an uplist application when the stock was trading at half the normal required share price for a Nasdaq listing.

Maybe they were gambling these recent PRs would start spiking the price and maybe they gambled they could keep the note holders from their dilution held in place long enough to let the stock go up. But maybe these guys holding shares don't play ball and the balancing act unravels and the dilution bites them in the rear end before they can do their acrobatics to get the share price higher. That's what it sounds like right now.

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